Manifesto for Growth: Post Brexit

City & Westminster Property Associations The Voice of Property in Central London

O H T T S E W F I O R N A G t i M OR rex F st B o P

Preface The property industry is a key driver of growth for central London and the UK. It is economic growth that creates new jobs, new workplaces, new homes and new public spaces.

Contents 02 03 04 08 10 13 19 22 23

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Preface Foreword Executive Summary Pillar 1 - UK Collaboration Aid the London property sector to work with counterparts across UK cities to increase collaboration, share knowledge and promote a greater understanding.

Pillar 2 – London’s Role Put London at the heart of the Brexit negotiations to ensure that its interests are understood, accepted and promoted by the UK negotiating team.

This document explores the local, regional and national policies and initiatives that will help London to continue to prosper as Britain leaves the European Union. Its intention is to establish areas where the City and Westminster Property Associations (‘the Associations’) can work collaboratively with partners to begin to address some of the areas that could potentially impede growth and prosperity post-Brexit.

It is meant as a constructive agenda for ensuring that London remains one of the world’s most important cities, attracting investment and talent from all over the globe.

During the 2015 General Election and the 2016 Mayoral election the Associations identified policy areas which are key to London’s future economic growth. This document restates many of those policies and builds on them to ensure that London continues to prosper following the vote to leave the European Union.

The Associations are comprised of 400 member companies, including all the major owners, developers, investors and advisors involved in central London real estate. Our members provide vital investment and infrastructure in meeting the future needs of Central London’s homes, offices, shops, public facilities and places.

Through construction, refurbishment and refitting our industry also creates a valuable supply chain for a wide range of businesses throughout the rest of the UK, with central London office development alone contributing £17.7bn GVA to the country. It supports 295,300 jobs a year, 85,500 of which are outside London.1 Our members invest in the long-term future of London which will be a city of 10.1 million people by 2036. The Associations urge the Government to work in partnership with us to mitigate the risk to the UK and realise, to the full, all the opportunities that Brexit can bring.

In this document we suggest five pillars of growth for London and the whole of the United Kingdom. We identify a range of policies and issues that need to be considered to maintain the capital’s status as a global city. London’s interests are the nation’s interests. Working together the whole of the UK can grow and thrive in a post European Union world.

Mark Ridley CPA President ——— James Cooksey WPA Chairman ——— Charles Begley CWPA Executive Director

Pillar 3 - Infrastructure and Environment Invest in world class infrastructure and create a healthy environment for residents, employees and visitors.

Pillar 4 – Homes and Workspaces Provide the homes that London needs and the modern workspaces for its businesses.

Pillar 5 – Future Workforce Provide the skills needed to build London and to attract and grow businesses.

References

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Foreword

Executive Summary

2017 is an important year for London. The consequences of economic and political uncertainties which appeared during 2016 will start to be better understood. In particular, some of the impacts of the UK’s referendum vote to leave the European Union will be felt. The United States has a new president, while major elections are looming in the Netherlands, France and Germany.

Britain’s decision to leave the European Union will have far reaching consequences for the UK, providing new opportunities for business but some uncertainty over the future of existing relationships. The strong economic, social and cultural links between London and our European partners have been a major contribution to our capital becoming the largest city in Europe and the world’s number one city of opportunity.2 Government and the private sector need to work together to ensure that Britain realises the opportunities offered by Brexit and minimise any risks to our country’s future prosperity.

As the most internationally-focused and productive part of the country, the capital faces a number of potential impacts a consequence of global political trends. Emerging evidence of the government’s negotiating stance in relation to exiting the EU (and other countries’ responses to it) will become clearer in the coming months.

This manifesto includes proposals to secure the future of central London’s economy. The Treasury is heavily dependent on London’s massive tax yield. Indeed, the country as a whole has a stake in the success and productivity of inner and central London. If there were any reduction in the income tax, VAT, Stamp Duty and business rates paid by London’s residents and businesses, public sector borrowing would have to rise further.

No one believes such an outcome would be good for Britain. But spelling out the benefits of a successful capital to the country as a whole has become more important than ever.

It is clear the property sector must also play its own part in strengthening those links between city regions, many of which will be electing new mayors in 2017, creating sharper competition for the capital, as well as greater opportunity for collaboration. The government, working with the Mayor, the boroughs and the City of London need to ensure that the UK’s re-set trade relations with the EU27 and the rest of the world sustain the success of recent years. Nothing can be taken for granted: other cities and countries will attempt to benefit from the UK’s decision to leave the EU. Competitors are already seeking to take advantage of uncertainty.

Property development is an important element in the London equation. The renewal and expansion of commercial buildings, coupled with the need for a substantial increase in the number of new homes, are essential to driving the economy forward. New projects, creative growth and improved infrastructure are crucial to the city’s attractiveness and also to its image.

The five pillars for growth outlined in this document provide a great summary of what Whitehall, City Hall and the boroughs should, working with the property industry and other sectors, commit themselves to achieve. London is well-placed to meet both domestic and international challenges, but only if civic institutions have the power and policy to do so.

The CPA/WPA manifesto makes the case for policies to deliver continued growth for London and the UK as a whole.

Professor Tony Travers Director, LSE London Chairman, London Finance Commission

Central London’s property industry is at the heart of the capital’s economic and social growth. We build the offices, shops and commercial spaces London’s businesses need. We build the homes and the facilities which make communities. The property industry will keep investing if there is the demand for workplaces and housing to support economic growth. As an enabler of growth our industry’s insight into the future requirements of businesses to accommodate jobs in the capital and the housing essential to support that, means that we are well placed to understand the capital’s future needs. Ultimately, it is the occupiers and owners which create and capture economic growth. The property industry facilitates that, so when it speaks it does so with a unique insight into their needs as the creators and curators of London’s built environment.

The case for London London is important both to the UK and globally. People from Britain and around the world strive to come to London and this diversity is its strength. The City’s and West End’s economic strength, London’s reputation as an urban gateway, technology access, and development and design status are strong foundations in London’s economic success, independent of EU membership, but we must ensure London remains this way.

So London has to up its game. It needs to demonstrate that its competitive status has not been diminished by the vote to leave the European Union. We cannot simply carry on as before, but outside the European Union. The Leave vote has presented an opportunity for fresh and innovative thinking in how best to structure our economy to ensure sustainable and inclusive growth. This is a major structural change to London’s economy and we all need to respond to it with urgency and boldness.

After the 2008 crash London managed to bounce back with increased diversity into technology, media and life sciences, and as a result London business is more diverse

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and resilient than ever before. We believe that London can take advantage of new post EU opportunities, but there are clearly risks along the way. This manifesto outlines what we believe is essential to encourage continued growth against increased global competition. It calls for investment to improve London’s attractiveness to business and measures to lower barriers to entry.

Enhancing economic growth throughout the UK The next few years will see a great deal of government time employed in negotiating Britain’s exit from the European Union. But at the same time this needs to be balanced by policy making in the UK and London to adapt now to the changes to come. We need Government to make decisions and announcements as quickly as possible in order to minimise the dangers of uncertainty. We also need non-essential policy announcements that could negatively impact business to be held back during this period. This would include areas around taxation and planning policy.

During the campaigns for the 2015 General Election and the 2016 London Mayoral election, the Associations produced manifestos proposing practical policies for growth for candidates to consider. Now, more than ever, London needs to adopt a wide range of these local, regional and national policies that will provide a real boost to London’s global competitiveness. Policy makers need to use every means possible to create advantages in this new era, not just for London but also for the wider UK. Greater collaboration between central London property and its counterparts in cities across the UK is essential to ensure property development and investment is maximised to the benefit of the country as a whole.

London must work with the rest of the UK’s cities in ways that accentuate the individual strengths of each region.

These reforms may serve as the bedrock to launch greater inter-city links across the UK. The perception of conflict between London and the rest of the country is unhelpful and inaccurate - a stronger London means a stronger UK, and it is essential that London and the rest of the UK work well together The increasing role of city mayors will give cities renewed impetus to further their own economic ambitions, increase partnership and attract investment. The Associations unequivocally support a formal network of city property leaders, supported politically at national and local level.

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The Five Key Pillars for Growth We believe that there are five key pillars of growth for London where central and London government need to be bold and radical in their policies to ensure that our Capital continues to appeal to national and global investors.

Some of these policy proposals we make for each of the five pillars for growth are needed immediately.

Others are longer term.

The five key pillars for growth and their main recommendations are –

1

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Aid the London property sector to work with counterparts across UK cities to increase collaboration, share knowledge and promote a greater understanding.

Put London at the heart of the Brexit negotiations to ensure that its interests are understood, accepted and promoted by the UK negotiating team.

UK Collaboration

I. Establish a Governmentsupported national framework to promote long term sustainable objectives.

II. Use a new ‘Cities framework’ to ensure opportunities are fulfilled and shared across the UK, through both development and associated supply chains.

III. Work with the British Property Federation (BPF) and other bodies across UK cities, including Government departments and agencies, to establish the foundations.

London’s Role

I. Recognise London’s importance to the wider UK economy during the Brexit negotiations.

II. Ensure business can hire the skilled workers it needs through an immigration policy which opens access to talent across the world.

III. Give the Mayor and local authorities greater control over their finances as recommended by the London Finance Commission.

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Infrastructure and Environment Invest in world class infrastructure and create a healthy environment for residents, employees and visitors.

I. Put London at the forefront of digital connectivity globally by improving London’s broadband infrastructure, such that it is within the top 10 in Europe by the end of this parliament.

II. Reduce pollution through freight consolidation and improved traffic management.

III. Promote Crossrail 2 as part of the National Infrastructure Plan to be brought forward within this Parliament and work to intensify development around the key transport hubs.

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Homes and Workspaces Provide the homes that London needs and the modern workspaces for its businesses.

I. Accelerate and increase the delivery of affordable housing of all forms by: i. Taking a pan-London approach. ii. Using the Mayor’s position and power to broker agreements, assemble land and provide funding where necessary to enable housing associations to build.

II. Recognise the significant contribution that institutionallyfunded private rented (PRS) development can make to the Greater London housing market, by encouraging local planning authorities to relax the application of affordable housing policy on such schemes.

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Future Workforce Provide the skills needed to build London and to attract and grow businesses.

I. Create incentives for young people to enter the construction sector and improve the quality and quantity of training.

II. Ensure business can recruit skilled workers to support growing industries in London and across the UK. III. Encourage apprenticeships by creating a pan-London apprenticeship scheme and involving the construction sector in the proposed Skills for Londoner’s taskforce.

III. Ensure that receipts from any Right to Buy sales are spent in London and lead to an increase in the stock of social housing in London.

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Pillar One UK Collaboration

Supply chain impacts in the UK from an analysis of construction in 11 Central London Boroughs’

Aid the London property sector to work with counterparts across UK cities to increase collaboration, share knowledge and promote a greater understanding.

The distribution of the supply chain expenditure in the UK 0% - 2% 2% -5%

Many of our members are actively involved in development across the UK and use supply chains across the country to support development in London which delivers £5.3 billion GVA to the UK.3 The British Property Federation (BPF) already has strong links and provides an exemplary service to its members.

But London, and in particular central London where 17%4 of all development nationally takes place, suffers from a perceived deficit of goodwill from the rest of the nation (exacerbated by the referendum). Therefore central London property has a particular duty to build alliances with other great cities across the country.

£5.3 billion

GVA contributed to the rest of the UK through central London construction Source: ‘Supporting development, enabling growth’, CPA/WPA & Deloitte, November 2015

Greater collaboration between central London property and its counterparts in cities across the UK is essential to ensure property development and investment is maximised to the benefit of the country as a whole.

London’s strength must be seen as advantageous of the UK as a whole. The Associations’ joint economic research, carried out by Deloitte, indicated the contribution of the London construction industry to the UK in monetary terms.

The total economic and employment impact is estimated to be £17.7 billion GVA and 295,300 jobs.5 London must work with the rest of the UK’s cities in ways that accentuate the individual strengths of each region.

These reforms may serve as the bedrock to launch greater inter-city links across the UK. Opening up more UK-wide collaboration will be a good thing, and will allow local government to learn from each other’s successes.

The increasing role of city mayors will give cities renewed impetus to further their own economic ambitions, increase partnership and attract investment. We at the City & Westminster Property Associations unequivocally support a formal network of city property leaders, supported politically at national and local level.

It is clear the Associations cannot on their own, and indeed should not, set the framework for such a mechanism. This is a genuine and open offer which we are keen to explore in partnership with the other bodies, regions and the Government, to increase the level of understanding and partnership across the country. We feel it is an important point to make as many of central London’s largest developers are already engaged in multiple towns and cities across the UK, and there are excellent forums already in existence representing local interests, through both the BPF’s regional committees and various local business groups. We believe genuine engagement within the property sector between these regions has been lacking and it’s in our interests to try and redress that.

5% - 10% 10% - 19%

Scotland

19% - 37%

5% Non UK

37% - 44%

North East

Northern Ireland North West

Yorkshire and The Humber

London is open, not only to the rest of the world, but also to the rest of the UK. East Midlands

WE ASK THE GOVERNMENT AND THE MAYOR TO: • Establish a Government-supported national framework to promote long term sustainable objectives.

West Midlands Wales

• Use a new ‘Cities framework’ to ensure opportunities are fulfilled and shared across the UK, through both development and associated supply chains.

East Anglia

London

• Work with the BPF and other bodies across UK cities, including Government departments and agencies, to establish the foundations.

South East South West

Source: Deloitte analysis of sample supply chain data from Supporting development, enabling growth, by CPA/WPA & Deloitte November 2015

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Pillar Two London’s Role Put London at the heart of the Brexit negotiations to ensure that its interests are understood, accepted and promoted by the UK negotiating teams.

We believe that London’s unique position in and contribution to the UK economy should be recognised in the forthcoming EU negotiations. London is the major driver of the UK economy. With just 13% of the population it creates 23% of the UK’s GDP and produces 30% of total tax revenue.6 Scotland and Wales have been pushing through Central government for guarantees on their positions in the exit negotiations to a much greater extent than London, despite having combined populations and GDPs that are smaller than the capital.

Indeed, if London’s economy is considered against European countries (on a comparable basis) it would rank as the eighth biggest economy; London’s economy is larger than Belgium, Sweden, Austria or Norway- and the Mayor therefore has a responsibility to ensure that London’s voice is heard. London’s economic success is further illustrated by the fact that, contrary to the country as a whole, London runs a trade surplus with the rest of the world. As a result, London’s economy provides a net injection to the national economy which, through supply chain linkages, helps to drive economic activity across the country. The more international trade London engages in the more economic activity there is likely to be for the rest of the UK. In the long term we believe that the best means for achieving this is through greater autonomy for City Hall.

Safeguarding London’s financial services industry The vote to leave the European Union will have an impact on many of London’s industries but in particular on London’s financial and insurance activities, which are our city’s biggest area of economic activity (accounting for almost a fifth of London’s GVA and over 4 per cent of the entire UK’s economic output7).

CITY TAKE-UP

BY BUSINESS SECTOR

SECTOR STRUCTURE OF WEST END TAKE-UP

The financial services sector represents a significant occupier across both the City and West End, as the graph below shows.

A priority for many financial institutions is to maintain as much access as possible to the EU single market after Brexit happens. Anthony Browne, head of the British Bankers’ Association, has said that it is important not to scrap regulation in the sector, lest it jeopardise equivalence between the UK and the EU.8

Association 2% Banking & Finance

30%

Corporate 2% Insurance 3%

The need for continued access to the EU is key for many UK based financial institutions in Brexit negotiations.

The recent commitments made by the Prime Minister to ensure business can provide financial services across national borders through a Free Trade Agreement, and the commitment to work towards transitional arrangements for UK business, are welcomed by the Associations.

Business Services

25%

Banking & Finance

14%

Creative Industries

40%

Public Sector / Regulatory Bodies

2%

WE ASK THE GOVERNMENT TO:

Media Tech

• Recognise London’s importance to the wider UK economy during Brexit negotiations.

Other/Undisclosed 11%

WE ASK THE GOVERNMENT TO:

Consumer Services & Leisure

6%

Professional Services

16%

• Explore every possible option to ensure ongoing passporting rights.

Manufacturing, Industrial & Energy

7%

Property & Construction

1%

Public Sector

1%

• Recognise the need for a more nuanced policy approach to London.

• Involve the Mayor of London and London businesses in the negotiations on EU withdrawal.

• Ensure London’s voice is heard on the Ministerial Committee recently announced by the Prime Minister

19%

Professional 6%

Retail 1% Serviced Office

1%

Service Sector

1%

• Maintain legal equivalence with the EU to ensure ongoing regulatory compliance (e.g. through MIFID 2 & Solvency 2).

CBRE, Q3 2015

• Ensure business can hire the skilled workers it needs through an immigration policy which opens access to talent across the world.

BNP Paribas, Q1 2016

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Pillar Three Infrastructure and Environment Devolution for London The biggest challenge for London in meeting its investment requirements is funding. London is much more reliant on national decision-making and national spending transfers than comparable cities worldwide: for example 74% of GLA and borough expenditure is funded from intergovernmental transfers, compared to equivalent figures of 31% in New York and 18% in Paris. If it is successfully to drive long-term investment, London needs more certainty in its funding streams, the ability to control a higher proportion of the taxation raised in London and a fiscal base against which it can borrow The original London Finance Commission saw economic growth as the “potential prize” of a further shift of financial and fiscal control to London. As London’s population continues to grow, with projections indicating ten million people by 2036, there will need to be massive investment to accommodate such growth. Beyond merely keeping pace with growth, the Commission’s findings indicated that by devolving more powers to the GLA and Mayor, London would be better able to prioritise decisions about investment.

Coupled with this, we also urge the Mayor and London boroughs to use their current powers to get London building. Even though greater devolution is welcomed, City Hall can become more involved by providing political leadership to support new development and help reducing the burden of pre-commencement conditions

WE ASK THE MAYOR TO: • Lobby for greater control over their finances for the Mayor and local authorities as recommended by the London Finance Commission, in particularo – Relaxing or removing borrowing limits to enable local authorities to build more affordable housing.

– Allow local authorities to set charges for services, such as planning application fee.

– Exploring radical approaches to enable investment to generate economic growth.

Invest in world class infrastructure and create a healthy environment for residents, employees and visitors.

Enhance London’s digital and power infrastructure Improving London’s utilities and digital connectivity will be crucial to support future business growth. London’s standing as a technology capital is held back by a reputation for poor digital connectivity, driven by some pockets of under-performance. The recent report by the House of Lords Select Committee on Digital Skills put London in 26th place on a league table of broadband speeds amongst European Capitals.9 11% of premises do not have access to superfast broadband.10 This is a particular challenge because these areas are concentrated in the centre and East of London where many high-growth SMEs (small and mediumsized enterprises) are located. Despite this, London is still considered the top tech hub in Europe, demonstrating that there is real capacity for growth in this sector if these problems can be alleviated.

As a result we fully endorse the Government’s decision to invest over £1 billion (with a significant portion coming from the National Productivity Investment Fund) into targeting support to roll out fibre optic connections. The announcement to support future 5G communications networks is also a positive step toward keeping the UK at the forefront of technological innovation.

Despite much of the work toward digital infrastructure, there are real issues surrounding traditional connectivity, namely electricity supply into new developments. Given the importance of the built environment toward enabling growth in all other sectors, the lack of NPIF funding for this is disappointing. So we ask that suppliers are forced to ensure the sector runs as efficiently as possible through stronger power for the regulators.

Ofcom, correct as of Dec 2016

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Modelled NO2 annual mean concentrations (µg/m3) for 2015 (baseline) NO2 (μg/m3) <16 16-19 19-22 22-25 25-28 28-31 31-34 34-37 37-40

Limit

40-43 43-55 55-58 58-73 73-76 76-97 >97 Source: Cleaner Air for London along with the GLA Economics

Improve London’s Environment WE ASK THE GOVERNMENT AND THE MAYOR TO: • Create a consistent policy covering the role and functions of regulatory agencies in order to provide greater confidence that regulatory decisions are made on an objective, impartial and basis.

• Develop greater powers to sanction underperforming utility and transport companies, especially in cases where agreed timeframes are exceeded.

• Incentivise utility companies to invest ahead of need where there are compelling economic cases to do so especially where there would be significant benefits to reducing disruption and congestion.

• Commit to improvements to London’s broadband infrastructure, such that is within the top 10 in Europe by the end of this parliament i.e. 2020.

Air pollution remains a major threat to our city, not just to the health of its citizens, but also to its appeal as a great city to invest in and visit.

We should make the most effective use of resources. The property industry has been at the forefront of reducing our carbon footprint, from retrofitting to incorporating the latest materials, techniques and technologies into new buildings.

Air quality in parts of central London is particularly poor.

London has the worst NO2 levels of any European capital.11 Our eventual exit from the EU must not result in a relaxing of the existing EU legislation and limits on air quality. In fact it provides an opportunity to redouble our efforts to tackle the root causes, rather than just the symptoms.

WE ASK THE MAYOR TO: • Continue to encourage reductions in all harmful emissions from vehicles and buildings, particularly C02 and NO2. In particular through freight consolidation and improved traffic management and public spaces.

• Work with the property industry to achieve significant reductions in energy use, water use and waste to landfill by London’s commercial occupiers.

• Encourage authorities to create a central zone in London where pedestrians and cyclists have priority, extend the strategic walking routes and provide facilities for electric vehicles.

• Work with the property industry to promote sustainable work spaces, living places, public realm and sustainable development within London.

• Pledge to remain at the forefront of digital connectivity such that the property industry can meet occupiers’ demands for “smart buildings”.

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Renew and enhance London’s infrastructure London’s continued growth will require both new infrastructure and the renewal of ageing facilities.

Population accessibility by public transport within 45 generalised minutes in London, by ward

To meet the needs of London residents and continue to support and attract businesses, it is vital that London invests in world class infrastructure, with additional airport capacity a vital aspect of this investment. London has seen substantial investment over the past decade. But this needs to be maintained to allow growth in commuting, to make new areas viable for affordable housing development and to bring prosperity to previously neglected parts of the city.

HAVERING

DAGENHAM

BEXLEY

We welcome the Chancellor’s commitment toward the National Infrastructure Commission in the Autumn Statement and we encourage the Government to accept an integrated approach linking infrastructure projects and homes.

We also welcome the Chancellor’s commitment to increase the productivity of the UK workforce. Productivity is key in delivering higher living standards and commercial investment. The Chancellor states that if Britain could raise its productivity rate of growth by just 1 percentage point a year we would within a decade add £250 billion to the size of the economy.12 We believe the best way to ensure high productivity in the workforce is to sustain and improve London’s world-class infrastructure. With better internet connectivity, improved transport networks to reduce commuting times and a healthier environment to work in we can improve London’s productivity and the UK’s economy.

1,000,001 - 2,706, 172 750,001 - 1,000,000 500,001,750,000 250,001 - 500,000 150,001 - 250,000 4,355 - 150,000

Source: Inter-Departmental Business Register, Office for National Statistics Contains National Statistics data

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Pillar Four Homes and Workspaces Provide the homes that London needs and the modern workspaces for its businesses.

• Work with the Infrastructure Commission to direct central government spending in London across all relevant departments. Seek out innovative funding mechanisms to continue to attract international investment.

• Take advantage of Crossrail to create better commuter connectivity between the outer boroughs and Central London and enhance other public transport routes to allow people to commute easily and cheaply into central London from the outer boroughs and beyond.

• Continue to promote Crossrail 2 as part of the National Infrastructure Plan to be brought forward within the life of this Parliament and maximise housing and commercial density around the key transport hubs. For example, in the remaining areas where station selection is up for debate, preference should be given to the areas where the greatest redevelopment opportunities are proposed to be delivered.

• Continue to upgrade tube lines, for example, the Bakerloo and Piccadilly Lines, and ensure that these are added to the UK’s top 40 priority infrastructure projects.

• Increase the intensification of new building, particularly around existing and new transport hubs and corridors, such as Crossrail 2.

• Continue to expand the night tube so that London can truly be a 24 hour city.

• Ensure proper infrastructure planning that integrates decisions on investment and the regulatory framework with land use planning so development can be enabled.

• Support additional use of the Thames and commit to future river crossings, particularly in the east.

• Take a strategic approach to transport, with greater collaboration between the Department for Transport and Transport for London and create allowances where TfL can step in if necessary.

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With land prices at a premium there must also be greater intensification of new developments. If the essential investment for the capital’s transport network and national termini proceeds, then private sector development will have a significant role to play in providing the funding. But we can only do this if there is a major policy shift to allow more intensive and high density buildings to replace aging stock.

The updated London Plan in 2018 will provide the Mayor with the policy instruments to help compel all London planning authorities to allow the growth that the capital needs. Where this does not happen the Mayor’s power to intervene in failing boroughs must be strengthened.

This is not about unfettered development but the efficient and logical expansion and densification of scarce space, especially sites close to transport hubs, whilst at the same time delivering improved public spaces. However, in central London, business space must be prioritised. Where homes are delivered the balance of tenure must be managed to ensure people from all backgrounds are catered for not just the richest and poorest which has in recent years created social divisions in our communities.

Westminster City Council December 2015 Annual delivery of office floorspace (sqm)

Annual delivery of office floorspace (sqm)

120,000

9,300,00

100,000 9,200,00 80,000 60,000

9,100,00

40,000 9,000,00 20,000 0

8,900,00

-20,000 8,800,00 -40,000 -60,000

8,700,00 13/14

WE ASK THE GOVERNMENT AND MAYOR TO:

The Autumn Statement has brought the issue of stamp duty back to the fore. A fall of £9.5 billion in receipts demonstrates a slowdown in the London property market as a result of previous stamp duty rises. A stagnant housing market, in which owners are deterred from selling due to the high costs involved, only harms labour and social mobility. It can also lead to developers delaying, or even cancelling, certain projects if buyers are put off by the excessive associated costs.

10/11 11/12 12/13

As part of his manifesto the Mayor pledged to unlock brownfield sites, including those owned by TfL, to development. Widening the remit of the London Land Commission Register by displaying which properties are considered for sale would allow developers to plan ahead to create and obtain planning permission on schemes so that building can commence as soon as the land is unlocked.

Office to residential conversions have also had a detrimental impact on central London. Whilst the Government has committed to safeguards through Article 4 exemptions due by 2017, which should at least protect the Central Activity Zone (CAZ), emerging business hubs on the fringes of the CAZ could still be vulnerable.

97 98 99 00 01 02 03 04 05/06 06/07 07/08 08/09 09/10

In her first speech as Prime Minister, Theresa May pledged to fight against injustice which means that “if you are young you will find it harder than ever before to own your own home”. For all its apparent success in terms of economic output, trade and tax raising potential, not everyone benefits equally from London’s prosperity. To achieve her government’s mission “to make Britain a country that works for everyone” it is essential that she works with the property industry, the Mayor and local authorities to increase housing supply in London, the region where by far the largest number of young people are unable to own their own homes.

Year

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WE CALL UPON THE GOVERNMENT AND THE MAYOR TO: • Unlock public land to developers.

• Pursue policies that allow for intensification, and densification of new developments, particularly around transport hubs.

• Support new and higher density development to provide the homes Londoners need whilst protecting vital employment space required for jobs and a growing economy.

• Reassess the 2014 stamp duty hike using the data that has been generated since.

• Encourage the London Land Commission to deliver more Public Sector Land for housing provision

Build more affordable homes of all forms London faces an acute shortage of housing which has led to an affordability problem for many working Londoners.

Many employers believe that the high cost of housing in London is harming the capital’s economy and inhibiting its ability to compete with other global cities. According to the London Business Survey 69% of companies believe that high housing costs are restricting their ability to recruit and retain skilled staff.13 Previous Mayors recognised the need to provide significantly more housing that meets the demands of all Londoners. But despite this, year after year, the number of new homes built falls short of London’s requirements.

Providing the homes Londoners need will require radical new thinking. And along with new homes we need new schools and hospitals and other community facilities.

But at the same time we must provide the employment accommodation for the millions of new jobs that will be created in London. In Central London, which already has some of London’s highest population densities, employment space is being irrevocably lost to residential development. The Mayor must retain the right balance, so that there is enough commercial accommodation for the growing number of jobs in the core commercial area of London. The capital’s long term success depends on both a step change in increasing housing supply and the creation of a thriving central business district and there should not be a trade-off between the two.

All of this means that the Mayor needs to take a more integrated view on the provision of a wide range of housing, community facilities and employment space across the whole of London - and beyond - to ensure that the capital can continue to expand successfully. It means increasing intensity and making best use of new and existing transport routes to enable easy commuting into the centre of London.

The Mayor also needs to appreciate the practical barriers which have prevented the private property industry from contributing more to the provision of homes that are affordable to all Londoners. He needs to work with the property industry, local authorities and central government to make the structural changes necessary to allow him to meet his goals of building greater numbers of homes in London.

The apportionment of a record £3.15 billion to the GLA for affordable housing in the Autumn Statement is a welcome step forward. These funds coupled with the additional freedom for the Mayor to decide how the money is spent, lay the groundwork to alleviate the Capital’s housing crisis.

However, there is more that can, and needs to be done, particularly if these funds are to be brought to bear for the delivery of 90,000 affordable homes by 2021.

WE ASK THE MAYOR TO: • Accelerate and increase the delivery of affordable housing of all forms by: – Taking a pan London wide approach.

– Using the Mayor’s position and power to broker agreements, assemble land and provide funding where necessary to enable housing associations to build.

• Support and encourage measures to allow local government to build significantly more social housing themselves through access to increased capital finance and innovative funding approaches.

• Encourage a London-wide approach to developer contributions to affordable housing, particularly in the CAZ, to maximise the number of new homes and community facilities (schools, hospitals, etc) that can be built throughout London.

• Encourage local planning authorities to be flexible in terms of the amount of affordable housing and other capital contributions they seek so that individual applications are viable and will actually get built. We welcome the Mayor’s decision to create a “viability unity” as an aspect of this.

• Ensure that receipts from any Right to Buy sales are spent in London and lead to an increase in the stock of social housing in London.

• Recognise the significant contribution that institutionally-funded private rented (PRS) development can make to the Greater London housing market, by encouraging local planning authorities to relax the application of affordable housing policy on such schemes and campaigning against national housing policy which will discourage such investment (specifically rent controls and increased stamp duty for multiple unit acquisitions).

• Create allowances in the planning system so that contributions such as consolidation are considered as community benefits.

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Pillar Five Future Workforce Provide the skills needed to build London and to attract and grow businesses

• Create incentives for young people to enter the construction sector and improve the quality and quantity of training.

One of the major challenges that London will face from leaving the European Union is providing the skilled and qualified labour needed, both to build the city and to allow its businesses to grow.

The Autumn Statement saw devolution of the adult education budget to the Mayor. Whilst this is a good first step, there is a need to link the capital’s workforce and planning strategies together. To ensure that London is in the best position to take advantage of potential growth, we need homes, jobs and the people who are qualified to do those jobs.

The potential loss of skilled European construction workers may put a break on the development of new homes and commercial space. The shortage of skilled construction workers is already hampering the delivery of projects across London. Even before the leave vote, a 51% average increase in training provision was needed to meet demand for construction labour between 2014-2017, to fill a gap of over 14,800 trainees.14

• Work with construction, businesses and skills providers to ensure that the skills required by the construction and house building industries in London are met.

• Involve the construction sector in the proposed skills for Londoner’s taskforce.

• Work with the industry and local authorities to increase the number of construction apprentices in London, in particular by creating pan-London apprenticeships.

• Promote a flexible immigration policy for people with the qualifications needed for London’s key industries to flourish and grow.

WE ASK THE GOVERNMENT TO:

5.8 million

• Investigate the skills employers need and publish findings so that a flexible policy can be drafted and UK training can help develop the skills needed to support growing industries in London.

jobs needed in London by 2036 So first we need to ensure the right encouragement, training and support is available for the UK’s young people to join the wide range of property related professions and provide workers with the skills needed to build London’s future.

But we also need to ensure that the new immigration system allows for gaps in the skilled labour force for property related industries to be filled.

10.1 million London’s population by 2036

And a world class city needs to recruit and retain world class employees in a wide range of professions. A flexible, adaptable and responsive labour market is vital for a global city. Appropriate international recruitment is important in meeting the needs of London business. Meeting the UK needs of international business migration, especially intracompany transfers, is a key factor for London’s continued success. Visa policy affects not only tourism but also inward investment and higher education.

Leaving the European Union must not raise a barrier to stop world class employees from working in London.

WE ASK THE MAYOR TO:

References: 1. ‘Supporting development, enabling growth’, November 2015,CPA/WPA & Deloitte 2. www.pwc.co.uk/industries/government-public-sector/insights/cities-of-opportunity-6-london-takes-thetopspot. html – ‘Cities of Opportunity’ , September 2016, PWC 3. ‘Supporting development, enabling growth’, November 2015,CPA/WPA & Deloitte 4. http://www.uncsbrp.org/economicdevelopment.htm 5. ‘Supporting development, enabling growth’, November 2015,CPA/WPA & Deloitte 6. http://colresearch.typepad.com/colresearch/2013/05/londons-role-in-the-uks-economy.html - ‘London’s role in the UK’s economy’, May 2013, Dr Laura Davison 7. https://www.london.gov.uk/sites/default/files/economic_evidence_base_2016.compressed.pdf - ‘Economic Evidence Base for London 2016’, November 2016, GLA Economics 8. https://www.ft.com/content/bbabb504-3d4b-11e6-9f2c-36b487ebd80a 9. https://www.publications.parliament.uk/pa/ld201415/ldselect/lddigital/111/111.pdf - ‘Make or Break: The UK’s Digital Future’, February 2015, House of Lords Select Committee on Digital Skills 10. http://maps.ofcom.org.uk/ broadband/broadband-data/ 11. http://www.policyexchange.org.uk/images/publications/up%20in%20the%20air.pdf – ‘Up in the Air: How to solve London’s air quality crisis – Part 2’, March 2016, Policy Exchange 12. ‘Policy paper: Autumn Statement 2016’, 23 November 2016, HM Treasury and The Rt Hon Philip Hammond MP

Source: ‘ Supporting development, enabling growth’, CPA/WPA & Deloitte, November 2015

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13. http://www.cbi.org.uk/cbi-prod/assets/File/pdf/LBS%20September%202016.pdf – ‘London Business Survey’, September 2016, CBI 14. w ww.kpmg.com/UK/en/IssuesAndInsights/ArticlesPublications/Documents/PDF/Market%20Sector/Building %20and%20Construction/skills-to-build-report.pdf – ‘Skills to build 20142017’, November 2014, KPMG

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